Image: Chanel

For its third-year ever, Chanel released its annual financial results, with revenues for the 2019 fiscal year rising to $12.3 billion (up from $11.28 billion in 2018) and operating profit was up by nearly 17 percent to $3.49 billion. In a release on Thursday, the 111-year old fashion house stated that its transition from longtime creative director Karl Lagerfeld, who died in February, to his right-hand Virginie Viard has been successful, pointing to sales growth of 28 percent for its ready-to-wear offerings, its “best-performing product line” for the year. 

Looking to 2020 and the impact that COVID-19 will have on its operations, Philippe Blondiaux, Chanel’s chief financial officer, said that the brand expects that the luxury industry, as a whole, “will feel the fallout from the coronavirus crisis for the next two years if not longer,” and warned that the stalwart French brand’s 2020 revenues and profit will take a significant hit as a result. “On the one hand, we have recorded a very strong performance with our local clientele in all the countries where we have reopened, with double-digit, sometimes even triple-digit, growth numbers week after week in countries like China, or Asia overall – but not only,” he said, reflecting on recent brick-and-mortar store reopenings. 

At the same time, though, “This very strong performance with the local clientele will be insufficient to compensate for the absence of international business, for the absence of international visitors and for the fact that our duty free business is still to a very large extent closed,” he said.

According to Reuters, “Chanel, which still expects to turn a profit this year, is reducing advertising and promotions by more than a quarter, cutting production and has cancelled or transformed some events like fashion shows this year, including by streaming them online.” Although, the brand says that two runways shows scheduled for later this year may still go on as planned. Still yet, the brand – which is known for its quilted leather handbags, tweed suits, and collection of fragrances and cosmetics – has increased prices on some products like handbags as raw material costs shot up.” 

As for whether Chanel intends to revamp its current e-commerce strategy, one that sees it limit the availability of products that can be purchased online to eyewear and cosmetics (and thus, not handbags, footwear, or ready-to-wear), Blondiaux emphasized that it does “not intend, crisis or no crisis, to sell fashion, watches and fine jewelry online.”